Although the differential persistence of accruals and operating cash flows is a firm-specific phenomenon, research seeking to exploit the differential persistence of these earnings components typically employs cross-sectional forecasting models. We find that a model based on firm-specific estimates of the differential persistence of accruals and operating cash flows is incrementally useful for out-of-sample forecasting relative to state-of-the-art cross-sectional models. In doing so, we show that firm-specific estimates of differential persistence are particularly useful when forecasting earnings for more stable firms (e.g., more profitable, lower growth, and less levered firms). We also demonstrate that a trading strategy exploiting investors' fixation on earnings and based on firm-specific estimates of differential persistence earns statistically and economically significant excess returns that are incremental to those generated by trading strategies based on the size of accruals. These results suggest that firm-specific estimates of differential persistence are incrementally informative for forecasting and valuation.

Although daylight saving time (DST) is thought to provide economic benefits, extant research documents various adverse effects of DST adjustments. However, prior research provides little conclusive evidence about the effects of DST adjustments on capital market participants. We examine the effects of “spring forward” DST advances, which disrupt the human sleep cycle and economic activities, on investors’ processing of earnings news. We find a delayed price response to earnings news released during the first week following a DST advance. We also find that this effect is stronger among firms with investors who are more likely to be trading on earnings news and among firms with less sophisticated investors. Our findings contribute to research on the unintended consequences of DST adjustments and to the growing literature on intra-investor variation in disclosure processing costs. Our study may be of interest to legislators currently debating proposed legislation that would eliminate DST phasing. Data Availability: Data are available from the sources cited in the text.

We find that firms are less likely to disclose information regarding a negative economic event for which the firm is likely to be blamed than a negative event for which the firm is likely to be perceived as blameless. We identify 383 material negative events (casualty accidents, oil spills, catastrophes, investor class action lawsuits) and find that firms are approximately four times less likely to disclose information following a negative blamed event than a blameless event. Consistent with disclosure of blamed events resulting in greater costs to the firm, we find that firms that disclose after a blamed, but not a blameless, event experience greater reputation and litigation costs than firms that do not disclose. We find that blame attribution provides incremental information over manager career concerns in the disclosure decision. These findings suggest that an event-specific factor—blame attribution—affects firms' propensity to provide disclosures about negative economic events. Data Availability: The list of 383 material negative economic events is available upon request.